(As seen in the Business Insider)
Every year, many Major League Baseball players who are unable to settle their contracts – including some playing in Tuesday’s All-Star Game – wind up in salary arbitration. How they handle that process – their strategy and approach, and even their demeanor in the hearing room – has a big impact on whether they win or lose. Those same strategies provide valuable lessons to millions of others now engaged in a process that has become a summer ritual like the All-Star Game: the mid-year performance review.
During the first decade of my career, I was privileged to participate in many high-profile salary arbitrations on behalf of Major League Baseball clubs – including those against Ivan Rodriguez, Johnny Damon, Steve Avery, Chuck Knoblauch, Andruw Jones, Kevin Brown, and Kenny Rogers. And now as an entrepreneur who provides recruiting and talent management services I have noticed several important parallels.
Salary arbitration is a regimented, established process for deciding a player’s monetary compensation for the coming season that is, of course, unique to baseball. The main difference from regular workplace performance reviews is that in arbitration an independent third-party makes the final, binding decision on compensation. Another big difference is that most workers don’t approach their performance reviews with the same sophisticated, advance preparation that baseball players bring to arbitration. But they should.
While some workplaces have more regimented performance review systems than others, every performance review meeting is an opportunity to make your best arguments about your work and how you should be compensated.
Here are a few key takeaways from my experience working on baseball salary arbitration hearings that all employees should use in their own performance reviews:
1. Know Your Stats
One of the beautiful things about baseball is its rich history of data: home runs, RBIs, on-base percentage, slugging percentage, ERA, saves, and on and on. In salary arbitration, each side marshals these statistics in voluminous exhibit books – tied together in a short written brief – to support its case. Both sides advocate for the salary they think is appropriate based on the player’s performance and salary compared to those of other major league players.
One of your most important responsibilities as an employee is to know how your performance will be judged. If you are an investment banker, is your key metric the number of deals you have advised on or total deal volume, or both? How is each weighted? If you are a reporter, is the number of stories more important than page views? Are page views more important than shares of your stories? Luckily, digital technology is making it easier to track performance for many jobs in many industries. But if hard data isn’t available, record your own accomplishments, experiences, and improvements throughout the year and bring to your review whatever comparables you can summon to support your position.
2. Emphasize Your Long-Term Value
Two of the more interesting salary arbitration hearings I worked on were the cases against Derek Jeter and Mariano Rivera. The hearings were in February 1999, after the Yankees had just won their second World Series Championship in three seasons (and just before they went on to win another two in a row). We lost both cases.
We went into arbitration knowing that both players were indisputably great, one-of-a-kind stars who had contributed to the Yankees success well beyond their respective $750,000 salaries. But their salary demands were unprecedented and far outside of Major League Baseball’s established salary structure. Jeter sought a raise to $5 million for one year; Rivera wanted $4.25 million. We made the case that the players were overreaching at this relatively early stage of their careers and that the club’s offer to raise their salaries by four times compensated them amply.
Both players were exceptionally modest, polite, and respectful in the hearing room, which made good impressions on everyone. But what stood out to me was a subtle, non-verbal cue they used to emphasize their value to their employer. Yankees General Manager Brian Cashman proudly wore his World Series ring, and he was right to be proud of his team’s accomplishment. Neither player, however, had on his ring. I can still see the arbitrator in Jeter’s case look at Cashman’s ring as he sat down and then turn his head to see Jeter’s bare hand. The same thing happened in Rivera’s hearing. The subtle message was that these stars were not hanging their hats on that one championship season. They did not communicate their value in a way that was tied to that season, but in a larger, forward-looking way as if their best years were yet to come. This was something both players delivered on, contributing memorably to the Yankees’ successes over the rest of their storied careers. The lesson here is that emphasizing your long-term value in the right way is often more powerful than making demands.
3. Play Hard, Play Nice
It is not easy for baseball executives to balance arguing down the financial worth of a star player with the need to maintain that player’s motivation and self-confidence. Salary arbitrations, by definition, let players know exactly how much their boss thinks they’re worth. And it can be a powerfully negative charge to a player’s psyche if he comes out on the losing end. In the same way, employees (and their managers) should not get so caught up in winning their argument that they harm the working relationship. Both sides need to remember that they still have to work together after these meetings. It is best for all parties to approach performance and compensation meetings with the view that they are just one part of a long relationship. You need to remember that, as members of a larger organization, you are building an overall body of work and career progression that is more important than any short-term payoff.
All performance-based discussions in the workplace – formal reviews, informal feedback, or that meeting where you ask for a raise – are important opportunities to emphasize your achievements and improvements, so be as prepared as you can. Because you often have just one chance to make your case with little time – much like the strict confines of the salary arbitration room – it is best to distill your pitch to its most salient points. And it doesn’t pay to overreach or resurrect and argue every little point from the year. Before your meeting, rehearse your pitch with your spouse or a trusted friend or colleague. Success, as any athlete will tell you, is 99 percent practice and preparation.
In the end, if it doesn’t go your way, you should go out and prove yourself “on the field,” as they do in baseball. Demonstrating your talent, in sports and in business, is far more persuasive than anything else.
Scott Gilly, Founder and CEO of Pivot Management Partners and DirectDep LLC, participated in salary arbitrations on behalf of Major League Baseball clubs while a lawyer at Morgan Lewis & Bockius LLP.